Invesco Perpetual Balanced Risk 6, 8 and 10 funds

Andy Parsons, head of investment research at The Share Centre, discusses how Invesco Perpetual's new diversified asset class funds could offer potential investors an alternative investment opportunity, especially given the volatile markets of the past several years.

"For many investors, portfolios are rarely built with any thought or consideration to the effects of overall volatility and asset class diversification, however for those that do venture as far as considering these factors, the difficulty is fully understanding how the actual asset classes react given varying economic conditions.

In recent times, there has been a raft of absolute return investment strategies that have attracted investor monies, albeit for many, their actual performance and understanding of what it is they are looking to achieve remains a mystery. 

"The new Invesco Perpetual Balanced Risk 6, 8 and 10 funds offer investors a new and innovative solution to limit such investment issues with the over riding aim of looking to reduce portfolio volatility over a market cycle.

"The underlying portfolios will be invested across the three basic asset classes of equities, bonds and commodities, with the management team continually reviewing and adjusting the asset class weightings as appropriate. The aim is to ensure that despite asset class weightings varying over time, each asset class will still contribute approximately the same amount of risk to the overall portfolio.

"The funds use a proprietary quantitative model run buy a highly experienced team managed by Scott Wolle in the US, following a three step investment strategy - asset selection, portfolio construction and active positioning.

"Investors need to note that these are not absolute return portfolios.  Instead they aim to specifically target prescribed average volatility levels over the course of a market cycle. This means the funds do have the potential to underperform during periods of strong market growth.

"We believe these funds offer a new and exciting opportunity for investors, moving away from the more recent traditional, congested and somewhat confusing arena of absolute strategies.

"For many private investors, market volatility can cause grave concern and any investment opportunity that looks to manage this to prescribed levels across a diversified asset class base should be of interest and consideration."